David Griffiths had been working as head of marketing for Europe in a market-leading payments company called Bottomline Technologies for five years - all the while thinking of how he could get to run his own small business - invaluable for large companies paying 50,000 or more supplier invoices per year.
The first company he had owned had specialised in developing and selling high-end web-based tools. Now he was impatient to get up and running again, and worked out that buying an established business offered the best route.
I'd been searching on BusinessesForSale.com and came across a number of businesses
"To be honest, I wanted a faster start," he says. "I've done it from scratch before and it takes a year and a half to get things going, and can be quite painful."
"I'd been searching on BusinessesForSale.com for about nine to 12 months and came across a number of businesses, which I investigated and interviewed, and for one reason or another, were not suitable. Then I found Montrose."
Reliable income stream
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Montrose had been trading for 5 years and was an established business with one, great product: software that sifts through invoices and identifies
David had found a business with a lot going for it. It sold a unique product - meaning there was no real competition - that large corporations found extremely useful.
In effect, he was buying a reliable income stream. "It was a reputable business with an existing customer base and good customer case studies - important for me as I wanted to avoid starting from scratch."
A fantastic opportunity it may have been, but the seller, Paul, found it difficult to find buyers - at least at first. He had paid an agent around £12k to put a package together and find corporate buyers, but that route came to nothing. Within two weeks of listing on BusinessesForSale.com, however, he found six, genuinely interested parties.
Confident about what he wanted, how to get it and how to run it, David was decisive. "I knew the business and knew the industry," he explains. "I put an offer in quite quickly, roughly at the asking price, which was a six-figure sum."
Buying a business is not always a smooth process, by any means, but David's purchase went through relatively quickly. "It was a similar process to buying a property, really: we started just before December and the whole process was completed in mid-March 2007."
Much of this time was spent on due diligence - working through what was and was not real in the company's assets, accounts and customer base - which was carried out over the course of several meetings at the company office and by talking to existing customers.
"There were several things that weren't up to the standard that I would expect," he says. "When you buy a house, if there are a few cracks, you can negotiate on the price. So we changed the payment terms a little bit to give me some assurances."
There were several other offers, but David believes the seller chose him as he demonstrated from the start that he was "committed" to an acquisition. By maintaining a productive, constant dialogue with the seller he ensured he was always further down the line towards securing a deal than any other potential suitor.
David did not involve an agent, choosing to carry out the due diligence himself. His professional legal advice was given by a specialist solicitor for a fixed price of £1,500 and there were no major legal issues during the sale.
"Like a house"
Since the acquisition he has redeveloped the product, expanded the customer base, improved customer services and rebranded the firm as Fiscal Technologies. But before doing so, he contacted all its customers to explain the changes and confirm that service would continue - albeit in an enhanced form.
"We have created V2 [version two] of the product and are just about to launch V3 in May 2008," says David. "Like buying a house, the first thing you do when you get in is redecorate"
Even though his intention had been to avoid the struggle associated with a brand new business, the past few months have still been challenging. "Again, it's like a house," he says. "You are re-gutting and putting in new equipment, and then, when it's all done, you have a housewarming" - the company's main relaunch took place in July 2007.
Nevertheless, if we continue with David's house-building analogy, a bit of DIY requires rather less effort than building a home from scratch. And in the time that David would otherwise have spent building walls, he has improved an already pleasing interior.
"Over the last 12 months I have built up the business," he says. "There are now 11 of us in total - some part-time, some contracted in, but all recruited personally - and it is ticking over very nicely indeed."
His customer base has grown too, doubling from 25 customers when he bought it to over 50 in the US as well as the UK - quite an achievement in just a few months. This was partly achieved by installing a new customer service management system, Salesforce, a product David describes as "invaluable".
David's and Fiscal Technologies' plans for the future are nothing less than ambitious. "We aim to expand substantially and reach a turnover of £1m by 2010. We have just set up an American office and are working with the UKTI [UK Trade & Investment] to develop our brand in the US market."
And this is where the analogy with buying a home falls apart: when you buy a business, you're not just buying a limited portion of land with bricks and mortar; you're also buying something with horizons for expansion that are limitless, potentially stretching to all corners of the world.